Term sheets and commitment letters are documents frequently used by lenders to outline the terms of a potential financing. However, these two documents differ with respect to what is required of, and whether the terms are binding on, the parties, write Paul M. Fogleman and Brian F. Corbett of Poyner Spruill LLP.

“A commitment letter differs from a term sheet in that it creates a binding agreement on the part of a lender to make a loan on the stated terms.” they write. “In addition, a commitment letter generally requires that a borrower reimburse a lender for out-of-pocket expenses and possibly pay a break-up fee if the loan transaction does not close, whereas there is generally no obligation for the borrower to pay these costs and fees in a term sheet.”

They offer some points to consider in drafting commitment letters and term sheets.

Read the article.

 

A thoughtful entrepreneur knows it is a better use of their time and money to hire someone to draft a contract at the beginning of a project than to try to do it themselves and have to hire a lawyer later to clean up the mess they created for themselves, writes Ruth Carter of Carter Law Firm in Phoenix.

She writes that she’s been seeing multiple situations where problems could have been prevented if the people involved had fully thought the situation through, called a lawyer to help them record their agreement in writing (and had the provisions they didn’t think about in advance), and signed their contract.

“Well written contracts are business gold,” she writes. “They put everyone on the same page from the beginning of the relationship and they outline how the parties will deal with problems when they occur.”

Read the article.

 

 

One of the more common forms of business disputes is a dispute over the failure to perform certain obligations set forth in a contract, and many businesses and individuals often wonder what is or what constitutes a “breach of contract,” writes Robert Fojo of Fojo Dell’Orfano of New Hampshire.

“If you entered into a contract, performed your obligations under that contract, and you are experiencing issues with getting the other party to perform its own obligations, you may have a situation where that party has not fulfilled its end of the bargain,” he writes.

“What do you do next? This is a question that haunts many businesses and individuals. How do you know what is a breach of contract? Are there any specific steps that need to be taken to make that determination? Should you go back and read the actual contract? How long do you have to do this? Should you talk to an attorney?”

Read the article.

 

Letters of intent can be minefields, writes Jeffrey Brown of Thompson Coburn.

“On the one hand, business people want to use them to tie up a deal. On the other, they don’t want to be bound by them if they want to walk away,” he explains in the article published on JDSupra.com. “As one court explained, ‘It is a common commercial practice for two negotiating parties to sign a letter of intent or an agreement in principle, signaling that they have come to a tentative agreement on the general outlines of a deal without having nailed down all of the details. Not infrequently, the negotiations that follow the execution of this document break down, prompting the disappointed party to sue on the theory that the preliminary document is binding.’ ”

He writes that parties must be careful in drafting LOIs if they want to avoid having a judge later hold that instead of a precursor to an agreement, the LOI became an enforceable agreement.

Read the article.

 

Matthew J. DeVries of Burr & Forman offers a few items to think about when drafting contracts, relying on a book titled “Courses on Drafting Contracts.” 

He quotes author and business attorney Peter Siviglia when he writes, “the contract will help define: (1) a transaction, such as the purchase of real estate; (2) a relationship, such as a partnership, or (3) a combination of both, such as a partnership to purchase and develop real estate.”

Other subjects include “A contract is a set of instructions,” and “A contract should include standard provisions.”

Read the article in Lexology.

 

The oil price crashes of the 1970s led to a wave of nationalization and changes to petroleum legislation by oil-producing states. Contractual stabilization clauses could help international oil companies (IOCs) protect their interests should the same occur again, reports Pinsent Masons in its Out-Law.com blog.

“Stabilisation clauses can be an effective tool to improve an IOC’s negotiating position when dealing with a change in law affecting the terms of an upstream petroleum contract. It is important to have the right approach to negotiating stabilisation clauses to achieve a mutually beneficial position for the IOC and the host state,” write George Booth, Niazi Kabalan and Leo Shaw for the firm.

Read the article.

 

The term “Peak oil” is the theory that oil production has maxed out and that decline is therefore inevitable, writes Mona Dajani in a white paper published by Baker & McKenzie. “The oil market is in a state of confusion, though several developments may serve to halt the momentum depending on their respective outcomes,” she writes.

“The race between new technologies and new resources is a major challenge; it is getting harder to access and extract oil and we are becoming more reliant on technological advances to meet this challenge. It should be noted, however, that if U.S. oil production declines significantly this year and prices remain relatively low, there is a chance that the world has seen the all time high of oil production,” she writes.

Read the white paper.

 

Kane Russell Coleman & Logan has posted an article by Karin Zaner on its blog, The Doctor’s Advocate, discussing 10 tips for physician employment contracts.

The article discusses the importance of reading and understanding the agreement before signing, leverage in terms of employment negotiation, non-compete obligations, non-solicitation and non-ownership obligations, HIPAA, privacy and trade secret confidentiality, income guarantees, logistics, finding a good match, recognizing red flags, and resisting the urge to resign.

Read the article.

 

 

China-based employers are required to have written employment contracts with all full-time employees, and if those contracts are not in place, the employer could be on the hook for double wages, reports Dan Harris on Above the Law.

“It is important to note that the above rules apply to foreign employees working in China and that some Chinese labor arbitration commissions and courts do not recognize anything other than Chinese language agreements as a valid written employment contract.” he writes.

He wrote that any business employing anyone in China without an up-to-date written contract in Chinese is at risk for a substantial penalty.

Read the article.

 

 

In many software development agreements, the customer has to accept the software before the contract is complete, Scott & Scott reports on its Software & Copyright Law Blog.

“If the product is not acceptable, the parties have a contractually described way to address issues before final payment is due,” writes Scott & Scott IP lawyer Brian Kirkpatrick. “However, in software-as-a-service (SaaS) transactions, SaaS providers often argue that the SaaS is available upon execution of an agreement and software delivery and acceptance is not required.”

He adds that, although physical delivery of software is not necessary for SaaS, delivery is still an important issue to address.

Read the article.

 

The U.S. Supreme Court recently found that a party licensing or selling its patent rights cannot receive royalties after a patent expires, regardless of whether or not the contract allows for the payment of such royalties. But an article published by Womble Carlyle Sandridge & Rice says that contract drafters can still achieve payment deferral and risk allocation without a long-term royalty distribution using creative and strategic provisions.

“Expiration of a patent also terminates the rights to collect royalties on that patent – even if a license contract says otherwise,” Theodore Claypoole writes in the article. “All businesses are reminded to check the termination date of any patent licensed to the business for use of underlying technology. While the license may remain valid, the licensor’s right to collect royalties may be invalid. While it is only natural for patent holders to want to profit from their patents as long as possible, according to the Supreme Court patent holders can only earn royalties for sales made before their patents expire. Royalty-bearing licenses like the one in Kimble should be careful in how payments are allocated, or risk partial or total invalidation.”

Read the article.

 

 

When you first enter a business deal, no one ever expects things to go poorly, writes Joe Covelli of Covelli Law Offices in Pittsburgh.

But many of these types of situations often go awry, and contract disputes are becoming a more common concern for businesses throughout the country.

“While each party enters a contract agreement after carefully reviewing a contract and determining its pros and cons, no contract is perfect,” he writes. “Some business deals even require the intervention of an experienced contract attorney to help guide the proceedings.”

The article discusses potential issues, performance under a contract, and the litigation process.

Read the article.

 

 

In recent years, many software publishers began using software audits as a means to increase revenue by penalizing customers for perceived compliance issues, writes Keli Johnson Swan, an associate at Scott & Scott.

The text of her post on the firm’s Software Audit Blog follows:

Software publishers often conduct direct audits, or audit through companies such as the BSA| The Software Alliance (“BSA”), or the Software & Information Industry Association (“SIIA”). Although many software users take advice about their audits from software vendors, authorized resellers, or other purported experts, the practice is not always recommended. Unfortunately, often these “certified partners” offer poor advice, costing businesses precious time and money. A growing number of businesses have learned the hard way to trust only an expert specializing in software copyright infringement to assist with software licensing and resolve software audits.

The following is a list of some of the worst advice we have heard for a company facing a software audit.

1. Immediately purchase all of the software necessary to remediate any compliance gaps, as it will be a sign of good faith.

Except for very particular circumstances, this might be the worst advice to a company facing an audit. The auditing entity typically sends the company a letter placing the company on notice that it must preserve all evidence of potential copyright infringement claims should litigation ensue and make no changes to its network. Purchasing the software can jeopardize a company’s ability to resolve the matter.

2. Uninstall all unlicensed software and ignore the audit.

Auditing publishers and third parties argue that failure to preserve all the evidence could constitute spoliation and entitle the publisher to damages for destruction of the evidence. Furthermore, it is rare for a company to be able to resolve an audit without a response. Once an audit is initiated, an auditor typically will not disengage absent a valid pre-existing release or overriding audit provision.

3. Purchase retail licenses for software that will ultimately be used for commercial hosting.

License agreements for software products vary widely, but typically retail license agreements specifically prohibit commercial hosting, which requires a specific type of license. Depending on the commercial hosting setup, the potential copyright infringement damages for purchasing the wrong license could be in excess of several hundred thousand dollars. Saving money on the front end by purchasing a cheaper license is not worth the potential copyright infringement penalties resulting from an audit.

4. Install all of the software you need and true up at the end of the year when you do not have an Enterprise Agreement.

Some software publishers offer license agreements that outline specific rights and obligations, including the right to audit, and an obligation to true up at the end of a specified period, such as a quarter or a year. However, these Agreements do not always cover all of the products a customer may have installed. The software products that are covered by the agreement are specifically listed as part of the agreement and any addenda. The Agreement outlines the terms by which a customer may true up and pay the difference between the number of users last reported and the number of new users on a pro-rated basis at an agreed rate. If it is not explicitly stated in a license agreement, end users do not have the right to true up.

Some software vendors have mistakenly led companies to believe that they had true up rights where none existed. Based on this erroneous advice, companies downloaded the necessary software as staff continued to grow, with the assumption that they could pay the difference during the true up period. Instead, the companies were faced with an audit, a significant compliance gap, and costly copyright infringement penalties.

Despite receiving such poor advice, a company may be held liable for copyright infringement pursuant to The Copyright Act regardless of whether management was aware of the infringement. It is critical to seek advice from a legal expert with experience in software licensing in order understand all of the risks involved with various strategies when faced with a software audit.

Pillsbury Winthrop Shaw Pittman has posted an article about the American Arbitration Association’s revised Construction Industry Arbitration Rules and Mediation Procedures which became effective July 1, 2015.

George Haley, John Heisse, Clark Thiel and Robert Thum write that, although some changes are relatively modest, others expand the powers of the arbitrator and may alter traditional assumptions underlying the selection of arbitration as a dispute resolution process for construction projects.

“For example, the Rules now provide a procedure for emergency relief that may result in more mid-project disputes being taken to arbitration or court, as the new Rule R-39 provides a party can seek emergency relief from either the AAA or a court, without violating the agreement to arbitrate,” they write.

Read the article.

 

Legal issues that most often come to mind when a company is closing a facility are terminating a lease or selling the asset(s), but those are just the tip of the iceberg, says Foley & Lardner in a Lexology.com article written by Nicholas Williams, an associate and litigator. He writes that potential problems may arise out of contracts seemingly outside the facility closure’s scope.

“Regardless of the reason, myriad legal considerations accompany a decision to close a facility. For example, we previously addressed the HR considerations. But, in many cases, issues can arise from provisions in unseen depths of contracts,” he writes.

The article offers five tips designed to help manufacturers avoid unwanted contractual surprises in the facility-closing process.

Read the article.

 

An article posted on the website of Neal, Gerber & Eisenberg discusses the adoption of the estoppel principle as a remedy for policyholders who have been wrongfully denied a defense by their liability insurers, as covered in the American Law Institute’s Preliminary Draft No. 1 of the Restatement on Liability Insurance.

“The rule that the duty to defend is triggered by unproven allegations, referred to as the ‘potentiality standard,’ recognizes the reality that the insured has no control over how the allegations are plead in liability matters,” writes Jill Berkeley.

“Estoppel, or forfeiture of defenses against coverage, in the end, is the penalty for a wrongful breach of the duty to defend. If there were no estoppel or additional risk to the insurer, there would be no downside to the insurer for wrongfully denying the policyholder the benefit of its bargain,” she writes.

Read the article.

 

Seyfarth Shaw reports on a contract case in which a California court found that an arbitration agreement between Texas-based Neiman Marcus and a California-based employee was unconscionable because the agreement designated Texas law as the law to apply.

“Many companies doing business in California have implemented arbitration agreements for resolving disputes with their employees,” the article says. “Companies headquartered in states other than California often prefer to use the law of their own state as the law to govern their contracts. In the context of arbitration, a valid choice of law can tell the arbitrator what law to apply.”

The case is Pinela v. Neiman Marcus Group, Inc.

“This holding should cause non-California employers pause prior to implementing an arbitration agreement that chooses a law other than California’s for disputes involving California employees,” the article says.

Read the article.

 

Managing legal documents and transactions across an enterprise of any size is complex and challenging, but the systems supporting the effort don’t have to be, according to a statement from Onit. A new class of Enterprise Legal Management (ELM) solutions, designed for the way people and companies work, is changing the way legal departments manage matters, budgets and processes.

Download this white paper to learn more about why many legal departments are paying for features they don’t need inside products their lawyers don’t use. Find out how smarter technologies are bridging the gap between the promise and reality of ELM systems.

The white paper covers:

• Background on legal systems and the new technology curve
• Driving operational improvements with the right systems
• Using easy-to-use Apps to supplement the capabilities of a current ELM system with advanced automation
• Getting started with Apps to begin a legal operations improvement initiative

var gform;gform||(document.addEventListener("gform_main_scripts_loaded",function(){gform.scriptsLoaded=!0}),window.addEventListener("DOMContentLoaded",function(){gform.domLoaded=!0}),gform={domLoaded:!1,scriptsLoaded:!1,initializeOnLoaded:function(o){gform.domLoaded&&gform.scriptsLoaded?o():!gform.domLoaded&&gform.scriptsLoaded?window.addEventListener("DOMContentLoaded",o):document.addEventListener("gform_main_scripts_loaded",o)},hooks:{action:{},filter:{}},addAction:function(o,n,r,t){gform.addHook("action",o,n,r,t)},addFilter:function(o,n,r,t){gform.addHook("filter",o,n,r,t)},doAction:function(o){gform.doHook("action",o,arguments)},applyFilters:function(o){return gform.doHook("filter",o,arguments)},removeAction:function(o,n){gform.removeHook("action",o,n)},removeFilter:function(o,n,r){gform.removeHook("filter",o,n,r)},addHook:function(o,n,r,t,i){null==gform.hooks[o][n]&&(gform.hooks[o][n]=[]);var e=gform.hooks[o][n];null==i&&(i=n+"_"+e.length),gform.hooks[o][n].push({tag:i,callable:r,priority:t=null==t?10:t})},doHook:function(n,o,r){var t;if(r=Array.prototype.slice.call(r,1),null!=gform.hooks[n][o]&&((o=gform.hooks[n][o]).sort(function(o,n){return o.priority-n.priority}),o.forEach(function(o){"function"!=typeof(t=o.callable)&&(t=window[t]),"action"==n?t.apply(null,r):r[0]=t.apply(null,r)})),"filter"==n)return r[0]},removeHook:function(o,n,t,i){var r;null!=gform.hooks[o][n]&&(r=(r=gform.hooks[o][n]).filter(function(o,n,r){return!!(null!=i&&i!=o.tag||null!=t&&t!=o.priority)}),gform.hooks[o][n]=r)}});

/* = 0;if(!is_postback){return;}var form_content = jQuery(this).contents().find('#gform_wrapper_12');var is_confirmation = jQuery(this).contents().find('#gform_confirmation_wrapper_12').length > 0;var is_redirect = contents.indexOf('gformRedirect(){') >= 0;var is_form = form_content.length > 0 && ! is_redirect && ! is_confirmation;var mt = parseInt(jQuery('html').css('margin-top'), 10) + parseInt(jQuery('body').css('margin-top'), 10) + 100;if(is_form){jQuery('#gform_wrapper_12').html(form_content.html());if(form_content.hasClass('gform_validation_error')){jQuery('#gform_wrapper_12').addClass('gform_validation_error');} else {jQuery('#gform_wrapper_12').removeClass('gform_validation_error');}setTimeout( function() { /* delay the scroll by 50 milliseconds to fix a bug in chrome */ jQuery(document).scrollTop(jQuery('#gform_wrapper_12').offset().top - mt); }, 50 );if(window['gformInitDatepicker']) {gformInitDatepicker();}if(window['gformInitPriceFields']) {gformInitPriceFields();}var current_page = jQuery('#gform_source_page_number_12').val();gformInitSpinner( 12, 'https://generalcounselnews.com/wp-content/plugins/gravityforms/images/spinner.svg', true );jQuery(document).trigger('gform_page_loaded', [12, current_page]);window['gf_submitting_12'] = false;}else if(!is_redirect){var confirmation_content = jQuery(this).contents().find('.GF_AJAX_POSTBACK').html();if(!confirmation_content){confirmation_content = contents;}setTimeout(function(){jQuery('#gform_wrapper_12').replaceWith(confirmation_content);jQuery(document).scrollTop(jQuery('#gf_12').offset().top - mt);jQuery(document).trigger('gform_confirmation_loaded', [12]);window['gf_submitting_12'] = false;wp.a11y.speak(jQuery('#gform_confirmation_message_12').text());}, 50);}else{jQuery('#gform_12').append(contents);if(window['gformRedirect']) {gformRedirect();}}jQuery(document).trigger('gform_post_render', [12, current_page]);gform.utils.trigger({ event: 'gform/postRender', native: false, data: { formId: 12, currentPage: current_page } });} );} ); /* ]]> */

Not all construction contracts are written, and contractors don’t always provide a written policy at the end of a project, writes Austin B. Calhoun of Florida-based Jimerson & Cobb. This raises the question: are oral multi-year warranties enforceable?

The article discusses a case involving Florida’s Statute of Frauds, which bars the enforcement of oral agreements that are not to be performed within one year. But Loper v. Weather Shield Mfg., a recent Florida First District Court of Appeals case, appears to have opened the door to enforcing oral multi-year warranties.

The article focuses on the Loper holding, as it applies to the Statute of Frauds and oral warranties for more than one year.

Read the article on Lexology.com.

 

Scott & Scott has published a list of the steps that companies usually can take when faced with a software audit – regardless of which publisher is conducting the audit – to help contain the risks and introduce a little predictability into the audit process.

“No one likes to be audited. In most cases, there is little that a business can do at the outset of an audit to avoid licensing exposure, if that business has historically inadequate software asset management processes,” Scott & Scott says in the post on its Software Audit Blog.

The first step listed is” Confirm you really need to participate. That step if followed by: Verify the audit scope … or not.

Finally, the firm suggests: Memorialize the right to review.

The article offers detailed suggestions for each step of the process.

Read the article.